- Conference call scheduled Wednesday, August 19, 2009 at 8:00 a.m. ET -
- Reaffirmation of 2009 sales projection to be $55 million to $60 million -
- H1N1 vaccine may drive additional growth -
BEIJING, Aug. 19 /PRNewswire-Asia/ -- Sinovac Biotech Ltd.
(NYSE Amex: SVA), a leading developer and provider of vaccines in China, announced today its unaudited financial results for the three-month and six-month periods ended June 30, 2009.
Financial Highlights
-- Sales for the quarter increased 21% to $20.0 million
-- Sales for the six-month period increased 5% to $26.6 million
-- Operating income for the quarter rose 52% to $10.7 million
-- Operating income for the six-month period increased 11% to
$11.3 million.
-- Net income attributable to the shareholders increased 74% to
$5.8 million in the second quarter, with diluted EPS of $0.14
-- Cash and cash equivalents at June 30, 2009 was $46.7 million.
Business Highlights
-- In June, Sinovac received the first order in China to supply its
pandemic influenza A (H1N1) vaccine to the Beijing government. The
initial order consisted of vaccines for 2 million people; delivery is
expected by the end of September with additional orders expected to
commence in October.
-- In July, Sinovac began the clinical trial of its H1N1 influenza
vaccine, enrolling 1,614 volunteers, including 101 elders, 706 adults,
404 juveniles and 403 children. The trial began on July 21, 2009 and
all of the volunteers received their first shot of the vaccine through
July 25, 2009. During the three-day observation period, none of the
volunteers experienced a severe adverse reaction. Between August 12
and 15, 2009, the volunteers received the second shot of the vaccine.
Preliminary tests on the H1N1 influenza vaccine have indicated that the
vaccine is safe and reliable in humans.
Mr. Weidong Yin, Chairman, President and CEO of Sinovac, commented, "We are very pleased with our second quarter results, with sales up 21% and net income up 74%. Our revenue growth in the quarter was partly driven by increased sales of our inactivated hepatitis A vaccine, Healive(R), to the public market, as we worked to fulfill the previously announced purchase order from China's Ministry of Public Health (MOH). Sinovac fulfilled and recorded 89% of the original order for $12.8 million worth of doses in the second quarter of 2009. Going forward, we will continue to focus on increasing our penetration of both the private and public markets.
"Since the onset of the global outbreak of the H1N1 influenza virus, Sinovac has earned a great deal of recognition from local and national governments and health agencies for our efforts to help prevent and control the spread of this virus. As China's only approved manufacturer of a pandemic influenza (H5N1) vaccine, we had the fully integrated human vaccine development expertise and manufacturing capability necessary to quickly produce a vaccine for H1N1. In June, Sinovac was the first company in China to receive an order for the H1N1 influenza vaccine; we expect to deliver the initial order of vaccines for 2 million people to the Beijing government by the end of September 2009. Administration of the second dose of H1N1 vaccine to volunteers began on August 12, 2009 and has been completed. The clinical data unblinding conference was held in Beijing on the afternoon of August 17, 2009. The analysis of the clinical trial results showed that the H1N1 vaccine developed by Sinovac induces good immunogenicity and has good safety profile after one dose. Sinovac plans to complete the summary report as soon as possible and fully evaluate the safety and immunogenicity of the H1N1 vaccine. We plan to apply for the Production License for H1N1 vaccine in compliance with SFDA's regulations. We are very proud to be able to make such a significant contribution in helping to slow the spread of this epidemic in China.
Mr. Yin continued, "We remain very excited about our growth prospects for 2009 and beyond. In addition to the H1N1 vaccine, we have a robust pipeline of other investigational vaccines, including enterovirus 71 (EV 71), pneumococcal conjugated vaccine, and Japanese encephalitis. Overall, our objective for the next three to five years is to have one or two product candidates per year entering into clinical trials beginning in 2010 and one or two products launched into the market per year commencing in 2012. In addition to our organic growth strategy, we have the financial flexibility to selectively pursue acquisition candidates that will help to expand our product pipeline, due to $47 million of cash and cash equivalents on our balance sheet. Previously, we projected revenues of $55 million to $60 million for the full year 2009. Based largely on expected demand for our H1N1 vaccine, we believe that our 2009 revenues will exceed expectations. However, due to uncertainty on the timing of future orders, we are not able to further quantify our expectations.
Market Overview
The market for Sinovac's principal product, Healive, has been developed with the PRC government greatly expanding publicly funded inoculations. As a result, the share of the market generated by public sales is expected to increase in the next few years, and private market sales are expected to decrease as a percentage of overall sales. Although the gross margin on public sales is lower than on private sales, Sinovac expects to realize offsetting cost savings and efficiencies.
In the current year, Sinovac expects to generate significant revenues from the sale of H1N1 vaccine, but this is expected to be a short-term initiative that will extend through to the end of the influenza season in the spring of 2010. These sales are not expected to be recurring, but demonstrate the Company's ability to develop, manufacture and distribute vaccines on short notice.
In future periods, the Company is seeking to expand its sales by adding new product lines, including the sale of animal vaccines by its subsidiary Tangshan Yian.
Financial Review for Three Months Ended June 30, 2009
During the second quarter of 2009, sales were $20.2 million, up 21.2 percent from $16.5 million in the second quarter of 2008. Sinovac continues to devote significant resources to marketing Healive to China's private market and an increase in demand for Healive in the public market is expected as well.
During the second quarter of 2009, Sinovac's unit dose sales were:
Three months ended June 30 2009 2008
(000 doses) (000 doses)
Healive 3,263 2, 720
Bilive 315 176
Sales of Healive in the quarter were largely driven by fulfillment of the previously announced MOH purchase order as part of its vaccination campaign. Sales of the hepatitis A vaccine to the public market accounted for 60% of total sales in the quarter. Sales of Bilive increased significantly during the quarter and the Company expects it to become a complementary product to Healive in the private market, whereas Healive is expected to increasingly penetrate the public market.
Gross profit for the second quarter 2009 was $16.3 million, with a gross margin of 81%, compared to $13.9 million and a gross margin of 84%, for the same period of 2008. The gross margin was adversely impacted by the lower selling price on the 2 million doses of hepatitis A vaccine sold to MOH. The gross margin for the second quarter of 2009 increased from the gross margin of 78% reported in the first quarter of 2009 due to efficiencies resulting from expanded production volume.
Total operating expenses for the second quarter of 2009 were $5.6 million, compared to $6.9 million in the comparative period in 2008. Selling, general and administrative expenses for the second quarter of 2009 were $4.9 million, compared to $6.0 million in the same period of 2008. SG&A expenses, as a percentage of second quarter 2009 sales, decreased to 24%, down from 37% during the prior year. The lower selling expenses resulted from the higher proportion of Healive sold to the government.
Net research and development expenses for the second quarter 2009 were $550,000, compared to $668,000 in the same period of 2008. R&D expenses in the second quarter of 2009 were mainly related to the EV 71 vaccine, pneumococcal conjugated vaccine, and universal pandemic influenza vaccine.
Second quarter 2009 operating income was $10.7 million, compared to operating income of $7.0 million in the prior year. Net income for the second quarter of 2009 included $126,000 in net interest and financing expenses and $2.1 million in income tax expenses. Net income for the same period of 2008 included $541,000 of net interest expense and $1.6 million of income tax expense. Net income for second quarter of 2009 was $5.8 million, or $0.14 per diluted share, up 75% compared to net income of $3.3 million, or $0.08 per diluted share, in the same period of 2008.
As of June 30, 2009, Sinovac's cash and cash equivalents totaled $46.7 million, compared to $32.9 million as of December 31, 2008. The increase in cash and cash equivalents primarily reflects an commercial bank loan obtained in the second quarter.
Financial Review for Six-Months Ended June 30, 2009
During the six-months ended June 30, 2009, sales were $26.6 million, up 4.7 percent from $25.4 million for the same period in 2008. Sinovac recorded a strong second quarter, which greatly improved the company's performance for the year to date.
During the first six-months of 2009, Sinovac's unit dose sales were:
Six months ended June 30 2009 2008
(000 doses) (000 doses)
Healive 4,034 4,220
Bilive 491 207
Anflu 136 23
Gross profit for the six-month period was $21.4 million, with a gross margin of 80%, compared to $21.7 million and a gross margin of 86%, for the prior year period. The gross margin was adversely affected by the lower selling price of the 2 million doses of hepatitis A vaccine sold to MOH in the second quarter of 2009. Total operating expenses for the first six months of 2009 were $10.0 million, compared to $11.6 million in the comparative period in 2008.
Selling, general and administrative expenses for the first six months of 2009 were $8.4 million, compared to $9.6 million in the prior year period. SG&A expenses as a percentage of sales decreased to 32 percent, down from 38 percent in the comparative period. Net research and development expenses for the first six-months of 2009 were $1.3 million, compared to $1.6 million in the prior year period.
Operating income for the six-months ended June 30, 2009 was $11.3 million, compared to an operating income of $10.2 million in the prior year period. Net income for the first six months of 2009 included $159,000 in net interest and financing expenses and $2.6 million in income tax expenses. Net income for the same period of 2008 included $653,000 of net interest expense and $2.3 million of income tax expense. Net income for the first six months of 2009 was $5.8 million, or $0.14 per diluted share, compared to net income of $4.9 million, or $0.12 per diluted share, in the same period of 2008.
Conference Call Details
The Company will host a conference call on Wednesday, August 19, 2009 at 8:00 a.m. ET (8:00 p.m. China Standard Time) to review the Company's second quarter financial results for the period ended June 30, 2009 and provide an update on recent corporate developments. To access the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (international). A replay of the call will be available from 11:00 a.m. ET on August 19, 2009 until September 2, 2009. To access the replay, please dial 1-877-660-6853 (USA) or 1-201-612-7415 (international) and reference the account number 3055 and the access code 330444. A live audio webcast of the call will also be available from the Investors section on the corporate web site at http://www.sinovac.com . A webcast replay can be accessed on the corporate website beginning August 19, 2009 and the replay will remain available for 30 days.
About Sinovac
Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacture and commercialization of vaccines that protect against human infectious diseases. Sinovac's vaccine products include Healive(R) (hepatitis A), Bilive(R) (combined hepatitis A and B), Anflu(R) (influenza), Panflu(TM) (pandemic influenza (H5N1) has already been approved for government stockpiling) and an H1N1 vaccine. Sinovac is developing vaccines for enterovirus 71, universal pandemic influenza, Japanese encephalitis vaccine, and human rabies vaccine. Its wholly owned subsidiary, Tangshan Yian, is conducting field trials for independently developed inactivated animal rabies vaccines.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
SINOVAC BIOTECH LTD.
Consolidated Statements of Income and Comprehensive Income
Three Months and Six Months Ended June 30, 2009 and 2008
(Unaudited)
(Expressed in U.S. Dollars)
Three months ended Six months ended
30-Jun 30-Jun
2009 2008 2009 2008
Sales $20,018,327 $16,521,429 $26,584,426 $25,383,430
Cost of sales 3,762,786 2,613,939 5,210,556 3,661,805
Gross profit 16,255,541 13,907,490 21,373,870 21,721,625
Selling, general and
administrative
expenses 4,860,279 6,038,650 8,407,902 9,616,536
Research and
development expenses 549,734 667,508 1,309,175 1,596,844
Depreciation of
property, plant and
equipment and
amortization of
licenses and permits 167,004 169,484 331,873 347,713
Total operating
expenses 5,577,017 6,875,642 10,048,950 11,561,093
Operating income 10,678,524 7,031,848 11,324,920 10,160,532
Interest and financing
expenses -199,113 -399,854 -325,313 -557,561
Interest income and
other income
(expenses) 73,020 -141,491 166,151 -95,141
Income before income
taxes and non-
controlling interest 10,552,431 6,490,503 11,165,758 9,507,830
Income taxes recovery
(expense)
- Current -1,471,543 -2,579,104 -1,795,917 -3,224,439
- Deferred -690,556 970,614 -847,950 897,433
Net income for the
period 8,390,332 4,882,013 8,521,891 7,180,824
Net income
attributable to non-
controlling interest -2,581,676 -1,545,764 -2,688,556 -2,284,619
Net income
attributable to the
stockholders $5,808,656 $3,336,249 $5,833,335 $4,896,205
Net income for the
period $8,390,332 $4,882,013 $8,521,891 $7,180,824
Other comprehensive
income
Foreign currency
translation
adjustment -38,279 960,676 26,620 2,243,204
Comprehensive income 8,352,053 5,842,689 8,548,511 9,424,028
Comprehensive income
attributable to non-
controlling interest 2,583,246 1,551,187 2,695,811 2,299,930
Comprehensive income
attributable to
stockholders $5,768,807 $4,291,502 $5,852,700 $7,124,098
Earnings per share -
basic and diluted 0.14 0.08 0.14 0.12
Weighted average
number of shares
of common stock
outstanding
- Basic 42,427,503 42,851,228 42,653,223 41,983,709
- Diluted 42,431,249 43,210,296 42,653,223 42,351,756
SINOVAC BIOTECH LTD.
Consolidated Balance Sheets
(Unaudited)
(Expressed in U.S. Dollars)
June 30, December 31,
2009 2008
ASSETS
Current assets
Cash and cash equivalents $46,704,452 $32,894,102
Accounts receivable - net 31,740,850 19,486,596
Inventories 9,654,400 6,486,351
Income tax refundable 521,484 348,018
Prepaid expenses and deposits 678,673 933,297
Deferred tax assets 448,965 1,189,831
Due from related party 1,460,963 --
Total current assets 91,209,787 61,338,195
Property, plant and equipment 21,244,659 19,262,099
Long term inventories 2,919,129 942,514
Deferred tax asset 545,102 569,937
Licenses and permits 893,146 1,090,477
$116,811,823 $83,203,222
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Loans payable $24,105,891 $8,024,277
Accounts payable and accrued
liabilities 11,708,409 11,909,037
Due to related parties 46,971 46,971
Dividends payable to non-controlling
shareholder of Sinovac Beijing 115,835 115,677
Deferred research grants 1,011,842 1,182,703
Total current liabilities 36,988,948 21,278,665
Deferred government grants 2,749,228 2,836,994
Loan payable 2,191,445 2,188,439
Deferred revenue-H5N1 9,642,356 --
Long-term debt 14,583,029 5,025,433
Total liabilities 51,571,977 26,304,098
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock -- --
Common stock 42,424 42,894
Additional paid in capital 41,422,187 41,629,506
Accumulated other comprehensive income 4,162,591 4,143,225
Dedicated reserves 5,549,684 5,549,684
Retained earnings (Accumulated deficit) 4,181,800 -1,651,534
Total stockholders' equity 55,358,686 49,713,775
Non-controlling interest 9,881,160 7,185,349
Total equity 65,239,846 56,899,124
Total liabilities and equity $116,811,823 $83,203,222
SINOVAC BIOTECH LTD.
Consolidated Statements of Cash Flows
Three Months and Six Months Ended June 30, 2009 and 2008
(Unaudited)
(Expressed in U.S. Dollars)
Three Months ended Six Months ended
June 30 June 30
2009 2008 2009 2008
Cash flows from (used in)
operating activities
Net Income for the
period $8,390,332 $4,882,013 $8,521,891 $7,180,824
Adjustments to
reconcile net income to
net cash used by
operating activities:
- deferred income taxes 690,556 -970,614 847,950 -897,433
- Loss (income) on
disposal fixed assets 2,434 -- -7,349 --
- stock-based compensation 61,540 16,635 128,043 33,271
- provision for doubtful
debts 1,443,986 932,113 2,312,924 1,559,918
- depreciation of
property, plant and
equipment, and
amortization of
licenses 431,753 388,460 864,107 780,563
- research and
development
expenditures
qualified for
government
grant -70,374 -126,829 -128,685 -130,848
Change in other assets
and liabilities
- accounts receivable 12,080,553 -9,218,834 14,543,552 13,369,079
- inventories -2,803,876 -865,187 -5,135,639 -2,314,630
- income tax refundable 712,224 -- -173,028 --
- prepaid expenses and
deposits 224,922 -403,304 255,826 -84,290
- advance from
stockpiling program 9,644,568 -- 9,644,568 --
- accounts payable and
accrued liabilities 1,487,986 3,668,617 -1,283,789 4,142,407
Net cash provided by
(used in) operating
activities 8,135,498 -1,696,930 1,303,267 -3,099,297
Cash flows from (used in)
financing activities
Loan proceeds 16,074,281 -- 16,074,281 --
Loan repayment -- -- -- --
Proceeds from issuance
of common stock -- 1,966 -- 9,815,265
Repurchase of common
shares -16,189 -- -335,832 --
Loan to non-controlling
shareholder of Sinovac
Beijing -- -- -1,460,600 --
Proceeds from shares
subscribed -- 39,295 -- 39,295
Dividends paid to non-
controlling shareholder
of Sinovac Beijing -- -- -- -2,947,877
Government grant
received -- 70,695 -- 70,695
Net cash provided by
financing activities 16,058,092 111,956 14,277,849 6,977,378
Cash flows from (used in)
investing activities
Restricted cash -- 935,765 -- -434,921
Acquisition of property,
plant and equipment -750,509 -1,229,151 -1,762,001 -2,236,575
Net cash used in
investing activities -750,509 -293,386 -1,762,001 -2,671,496
Exchange effect on cash
and equivalents -47,508 119,919 -8,765 542,189
Increase (decrease) in
cash and cash equivalents 23,395,573 -1,758,441 13,810,350 1,748,774
Cash and cash
equivalents, beginning of
period 23,308,879 20,578,712 32,894,102 17,071,497
Cash and cash
equivalents, end of
period $46,704,452$18,820,271 $46,704,452$18,820,271
Cash paid for interest,
net of interest
capitalized $206,866 $133,612 $330,268 $306,005
Cash paid for income
taxes $759,318 $871,557 $1,968,944 $1,309,963
For more information, please contact:
Helen G. Yang
Sinovac Biotech Ltd.
Tel: +86-10-8289-0088 x9871
Fax: +86-10-6296-6910
Email: info@sinovac.com
Investors:
Amy Glynn/Sara Pellegrino
The Ruth Group
Tel: +1-646-536-7023/7002
Email: aglynn@theruthgroup.com
spellegrino@theruthgroup.com
Media
Janine McCargo
The Ruth Group
Tel: +1-656-536-7033
Email: jmccargo@theruthgroup.com